Which of the Following Is Not a Good Reason to Form

question 19

Multiple Choice

Which of the following is not a good reason to form a family partnership?

• A) Income can be shifted to lower-tax-rate individuals
• B) A buy-sell agreement can ensure that all ownership interests are retained in the family
• C) No gift tax is due on the transfer
• D) Non-voting interests can be given to younger family members to ensure the older generation maintains operational control

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Definitions:

Saving Incentives

Financial or regulatory measures designed to encourage individuals or businesses to save more money.

Interest Rate

This represents the percentage of the principal that lenders charge borrowers for the access to assets.

Investment

Allocation of resources, usually money, in the expectation of generating an income or profit.